Sarmiento v. Fresh Harvest, Inc.
| Decision Date | 01 December 2021 |
| Docket Number | Case No. 20-cv-07974-BLF |
| Citation | 573 F.Supp.3d 1378 |
| Parties | Rigoberto SARMIENTO, et al., Plaintiffs, v. FRESH HARVEST, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Dawson Morton, Dawson McKinnon Morton, Maria Esmeralda Vizzusi, Santos Gomez, Law Offices of Santos Gomez, Watsonville, CA, Connie K. Chan, Eve Hedy Cervantez, James M. Finberg, Zoe Louise Palitz, Altshuler Berzon LLP, San Francisco, CA, for Plaintiffs.
Charley Mackey Stoll, Charley M. Stoll APC, Camarillo, CA, David Abba Schwarz, Derek R. Havel, Ian Michalak, Robert Mussig, Tyler J. Johnson, Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, CA, for Defendant Fresh Harvest, Inc.
Ana Cristina Toledo, Lindsey Noelle Berg, Noland Hamerly Etienne & Hoss, Salinas, CA, Tyler J. Johnson, Ian Michalak, Sheppard Mullin Richter Hampton LLP, Los Angeles, CA, for Defendant Fresh Foods, Inc.
Charley Mackey Stoll, Charley M. Stoll APC, Camarillo, CA, Tyler J. Johnson, David Abba Schwarz, Derek R. Havel, Ian Michalak, Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, CA, for Defendant SMD Logistics, Inc.
Ana Cristina Toledo, Lindsey Noelle Berg, Noland Hamerly Etienne & Hoss, Salinas, CA, Tyler J. Johnson, Sheppard Mullin Richter and Hampton, Los Angeles, CA, for Defendant Rava Ranches, Inc.
ORDER GRANTING PLAINTIFF GUSTAVO LUEVANO-VACA'S MOTION TO DISMISS DEFENDANTS FRESH HARVEST, INC. AND SMD LOGISTICS, INC.’S COUNTERCLAIM WITH PREJUDICE
[Re: ECF No. 66]
Before the Court is Plaintiff Gustavo Luevano-Vaca's Rule 12(b)(6) motion to dismiss Defendants Fresh Harvest, Inc. and SMD Logistics, Inc.’s (collectively, "Fresh Harvest") counterclaim for breach of a December 31, 2020 settlement agreement ("Settlement Agreement"). The underlying action arises out of alleged violations of federal and California state employment laws and regulations by Fresh Harvest and Defendants Fresh Foods, Inc. and Rava Ranches, Inc. related to their employment of truck drivers through the H-2A visa program. Luevano-Vaca moves to dismiss Fresh Harvest's breach of contract counterclaim on the basis that the Settlement Agreement is void as contrary to public policy under 29 C.F.R. § 501.5 of the H-2A regulations. Luevano-Vaca argues that 29 C.F.R. § 501.5 prohibits waiver of an H-2A worker's rights under the H-2A regulations outside of specific circumstances, and none of these circumstances applied to the Settlement Agreement.
The Court hereby GRANTS Luevano-Vaca's motion to dismiss Fresh Harvest's counterclaim WITHOUT LEAVE TO AMEND.
On November 12, 2020, Plaintiff Rigoberto Sarmiento filed a class action complaint against Defendants asserting employees’ right to receive prevailing wages and equal pay under their employment agreement, the H-2A visa program, and California state employment law. Complaint, ECF No. 1. Luevano-Vaca was added as a named class representative in the First Amended Complaint, which was filed on June 11, 2021. First Amended Complaint ("FAC"), ECF No. 53. Luevano-Vaca alleges that he was an H-2A visa worker for Defendants. Id. ¶¶ 3, 9. In response, Fresh Harvest answered and counterclaimed against Luevano-Vaca for breach of contract based on his bringing claims against Fresh Harvest in violation of a settlement agreement entered into between Luevano-Vaca and Fresh Harvest. Answer and Counterclaim, ECF No. 59.
Fresh Harvest alleges that Luevano-Vaca and Fresh Harvest executed the Settlement Agreement on December 31, 2020. Counterclaim, ECF No. 59 ¶¶ 6, 8; id. , Exs. A-B. Fresh Harvest admits that Luevano-Vaca worked for Defendant Fresh Harvest, Inc. pursuant to an H-2A visa in 2019 and 2020. Answer, ECF No. 59 ¶ 9. The Settlement Agreement was executed after the filing of Sarmiento's class action, but before Luevano-Vaca joined this lawsuit as a named Plaintiff. Counterclaim, ECF No. 59 ¶ 9.
In the Settlement Agreement, Luevano-Vaca agreed to settle "any and all claims arising out of [his] employment with [Fresh Harvest]." Id. ¶ 6. Luevano-Vaca specifically released any claims alleged in Sarmiento's class action. Id. ¶ 10. Further, Luevano-Vaca released claims against Fresh Harvest and any affiliated companies, id. ¶ 7, which Fresh Harvest argues included Defendant SMD Logistics, Inc. Opposition, ECF No. 69 at 14. Luevano-Vaca acknowledged that he was in receipt of a disclosure statement regarding Sarmiento's class action and that he had an adequate opportunity to seek the advice of counsel. Counterclaim, ECF No. 59 ¶ 13; see id. , Ex. C. Further, Luevano-Vaca agreed to the following provision:
In the event of a breach of this Agreement by Employee, any and all consideration paid hereunder shall become immediately due and payable by Employee to Company. For purposes of this paragraph, the filing of any action or proceedings described in paragraph 8 or a breach of Employee's obligations in paragraphs 1 or 6 shall conclusively be a breach of this Agreement.
Counterclaim, ECF No. 59 ¶ 12. Defendant Fresh Harvest, Inc. agreed to pay Luevano-Vaca $2,644.80 pursuant to the Settlement Agreement. Id. , Ex. A ¶ 1. Fresh Harvest alleges that Luevano-Vaca breached the Settlement Agreement by joining the present action and asserting claims against Fresh Harvest. Counterclaim, ECF No. 59 ¶¶ 15-20.
On July 16, 2021, Luevano-Vaca filed his Motion to Dismiss Fresh Harvest's breach of contract counterclaim. See Motion, ECF No. 66. On July 30, 2021, Fresh Harvest filed an Opposition. See Opposition, ECF No. 69. On August 6, 2021, Luevano-Vaca filed a Reply. See Reply, ECF No. 79. On October 7, 2021, the Court held a hearing on Luevano-Vaca's Motion.
In his Motion, Luevano-Vaca moves to dismiss Fresh Harvest's counterclaim on the basis that the Settlement Agreement is void because it violates the express language of the H-2A regulations’ waiver of rights prohibition at 29 C.F.R. § 501.5 as contrary to public policy. Luevano-Vaca argues that the Settlement Agreement does not meet either of the exceptions provided in 29 C.F.R. § 501.5 because it was neither (1) supervised via the Department of Labor in an enforcement action or (2) in settlement of private litigation between Luevano-Vaca and Fresh Harvest, since Luevano-Vaca was not a party to this litigation at the time. In their Opposition, Fresh Harvest argues that 29 C.F.R. § 501.5 does not invalidate the Settlement Agreement. Fresh Harvest argues that the Settlement Agreement is a valid resolution of Luevano-Vaca's employment claims related to Fresh Harvest's past conduct and the release of liability is compliant with § 501.5 because it was "in settlement of private litigation."
"A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’ " Conservation Force v. Salazar , 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001) ). In this inquiry, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc. , 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig. , 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations omitted). While a complaint is not required to contain detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. On a motion to dismiss, the Court's review is limited to the face of the counterclaim and matters judicially noticeable. MGIC Indem. Corp. v. Weisman , 803 F.2d 500, 504 (9th Cir. 1986) ; N. Star Int'l v. Ariz. Corp. Comm'n , 720 F.2d 578, 581 (9th Cir. 1983).
In deciding whether to grant leave to amend, the Court must consider the factors set forth by the Supreme Court in Foman v. Davis , 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962), and discussed at length by the Ninth Circuit in Eminence Capital, LLC v. Aspeon, Inc. , 316 F.3d 1048 (9th Cir. 2003). A district court ordinarily must grant leave to amend unless one or more of the Foman factors is present: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by amendment, (4) undue prejudice to the opposing party, or (5) futility of amendment. Eminence Capital , 316 F.3d at 1052. "[I]t is the consideration of prejudice to the opposing party that carries the greatest weight." Id. However, a strong showing with respect to one of the other factors may warrant denial of leave to amend. Id.
At issue in this case are the requirements imposed on employers who participate in the H-2A visa program, including wage requirements. Congress created the H-2A visa program to allow employers to hire non-citizens to fill temporary agricultural jobs pursuant to certain regulatory requirements. See 8 U.S.C. § 1188. A petition to hire an H-2A employee requires a certification that "(A) there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services involved in the petition" and "(B) the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed." 8 U.S.C. § 1188(a)(1). The Department of Labor ("DOL") is "authorized to take such actions,...
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